Navigating Stamp Duty Land Tax: 6 Important Considerations

Stamp Duty Land tax is payable if you purchase a property or land over a certain price in England and Northern Ireland. It is calculated based on the purchase price of the property, the rates do vary dependant on the value of the property, the thresholds are below:

What are the current thresholds for SDLT?

• £250,000 for residential properties
• £425,000 for first-time buyers buying a residential property worth £625,000 or less
• £150,000 for non-residential land and properties For more information visit the government website here.

What are 6 key things you should know regarding SDLT?

What is the extra surcharge on a second residential property?

As a business owner, you may own your own house and may be looking to purchase a second residential property, you may want a second home or may want to use this as a buy-to-let property. On any purchase of a second property, if you have not sold your main residence, a surcharge of 3% applies to the standard SDLT rates due to the fact that you now own two properties. You can use this SDLT calculator here to work out how much SDLT tax you are likely to pay.

What is the SDLT relief for first-time buyers?

First-time buyers can benefit from relief on SDLT when purchasing a property for £425,000 or less. No tax will be payable up to £425,000 and anything between £425,001 and £625,000 a reduced rate of 5% will be payable. No relief is available on anything over the £625,000 threshold. It is important to note that once a first-time buyer purchases a property, no relief is available on any subsequent purchases.

What is multiple dwellings relief and why has it been removed?

Multiple dwellings relief is a tax relief that can be claimed against SDLT when a purchaser buys more than one residential dwelling in a single, or linked, transaction. This relief was abolished on the 4th of June 2024 largely due to the relief being abused by taxpayers, and significant lost revenue for HMRC.

What are the high rates of SDLT for companies buying residential property?

Companies buying residential property will usually face higher rates of SDLT rates. There is a 15% flat rate for companies purchasing residential property that has a value of over £500,000, although there are a number of exclusions to this flat rate which may be applicable. If an exclusion applies, SDLT is paid at the same residential rates as individuals, but with a 3% surcharge applicable at each band.

Is SDLT chargeable on the VAT inclusive amount?

When it comes to commercial property, it is important to remember that if there is VAT applicable on the commercial property, SDLT is chargeable on the VAT inclusive amount. Buyers should check whether VAT applies to their commercial property purchase and account for this when budgeting for SDLT.

Can moveable assets reduce SDLT?

If the purchase price of the property includes any moveable assets such as carpets or furniture, under current rules it is recommended to pay for these things separately to ensure that they aren’t increasing the value of the property price and in turn making your stamp duty bill higher.

SUMMARY
Stamp Duty Land Tax is a complex area of taxation. It is important to remember that SDLT rates and guidelines are often subject to changes, therefore it is recommended to always check the latest regulations. Always make sure that you are taking appropriate advice before taking any action. If the transaction that you are involved in is complex, we highly recommend consulting with a tax adviser to ensure that you are optimising relief where possible.

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Please note: This article is provided for information only and was correct as at time of writing (26/09/24). Any lists and details provided above are not exhaustive and are not intended to be full and complete guidance.  No action should be taken without consulting detailed legislation or seeking independent professional advice. Therefore, no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this article can be accepted.